Presentation by Loreto Leyton on the Pacific Alliance and the business opportunities in a new regional context

1. PACIFIC ALLIANCE
Business Opportunities in a new regional context
Loreto Leyton – Chile Pacific Foundation
Sydney, October 2016

2. A Regional Integration Area
- Intended to progressively advance to the free movement
of goods, services, capital and people
Areas of Work:
- Movement of business people and facilitation of
migratory movements
- Trade and integration, including trade facilitation
measures
- Trade in services and movement of capital
- Cooperation and dispute settlement
PACIFIC ALLIANCE

3. PACIFIC ALLIANCE IN FIGURES

4. • 2.4% of world GDP (current
prices)
o 3.3% of world GDP
(purchasing power parity)
• 39% of Latam’s GDP
o 44% in PPP
• 225m population
• Per capita GDP (PPP)
USD 16,462 vs. USD 11.800
(Latam)
• 55% of Latam’s exports (USD
512bn of goods)
• 3% of world trade (2014)
• Attracted USD 70bn in FDI (2014)
(IMF, Oct. 2016)
0 5.000 10.000 15.000 20.000
1. US
2. China
3. Japan
4. Germany
5. India
6. UK
7. France
8. Brazil
9. Pacific Alliance
10. Italy
World’s 9th biggest economy
PACIFIC ALLIANCE IN FIGURES

5. Average GDP
growth rate over
10 years
2012-2021, based on IMF
forecasts
Economic growth
(IMF, Oct. 2016)
2,00
2,50
3,00
3,50
4,00
4,50
5,00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Output will rebound next year
Chile 3.0%
Colombia 3.8%
Mexico 2.6%
Peru 3.9%
Pacific Alliance 3.3%
PACIFIC ALLIANCE IN FIGURES

6. Market efficiency rankings
0
20
40
60
80
100
120
140
%ofprofits
Total tax rate
PACIFIC ALLIANCE IN FIGURES

7. Market efficiency rankings
0
2
4
6
8
10
12
Trade tariffs, % duty
PACIFIC ALLIANCE IN FIGURES

8. Market efficiency rankings
0
1
2
3
4
5
6
7
Business impact of rules on FDI
[1 = extremely restrictive; 7 = not restrictive at all]
PACIFIC ALLIANCE IN FIGURES

9. PACIFIC ALLIANCE MAIN ACHIEVEMENTS

10. • Acquisition of significant international interest and
participation (49 observer countries to date)
• Launch of the Interoperability of Trade Single Windows
among the four countries
• Mutual recognition agreement of digital signatures
• Mexico’s incorporation to the Latin American Integrated
Market (MILA) of the Stock Exchanges
PACIFIC ALLIANCE MAIN ACHIEVEMENTS

11. • Launch of the Information Exchange Platform for immigration
security
• Establishment of the Pacific Alliance Entrepreneurs Association
(ASELA)
• Launch of the Public-Private Innovation and Entrepreneurship
Agenda of the Pacific Alliance
PACIFIC ALLIANCE MAIN ACHIEVEMENTS

12. • Launch of the PA Entrepreneurship Venture Capital Fund
• Joint investment promotion strategy
• MOU among PA Consumer Protection Agencies to promote
protection of consumers in the PA countries
• Scholarships students: In 3 years 1,400 fellows
PACIFIC ALLIANCE MAIN ACHIEVEMENTS

13. • Plan of Action for the Mutual Recognition Agreement of the
Authorized Economic Operators Programs (AEO)
• MOU for obtaining Patents through an Accelerated Process
• Joint Promotion Investment Events in Asia and Europe (China,
Japan, Korea, Germany, England, Spain, etc.)
PACIFIC ALLIANCE MAIN ACHIEVEMENTS

14. Visa exemption to the interior of the Pacific Alliance for
foreigners from third countries with permits of permanent
residence in any of four countries AP.
measure currently implemented by 4 countries except
for Chile that limits it to a number of countries
Electronic certificates, today it have already been issued:
Around 85 certificates, from 01/05 to 30/09 2016
PACIFIC ALLIANCE MAIN ACHIEVEMENTS

15. PA Entrepreneurial Capital Fund
aims to have a capitalization of US $ 100 MM, with a
first closing estimated of US$ 40 million
Public-private partnership
Will provide intelligent capital to companies in AP
countries (seed capital and entrepreneur funds for high
growth companies).
PACIFIC ALLIANCE MAIN ACHIEVEMENTS

16. PA countries have low participation in global value chains
(except on a smaller scale of Mexico), and when they are
involved, make it mostly in the lower chain (with little added
value).
Evidence suggests that in the medium term
this number could increase by 40% with an
integration agreement type PA
PACIFIC ALLIANCE MAIN ACHIEVEMENTS

17. If PA countries succeed in improving quality of logistic
infrastructure (ports, airports and telecommunications) to the
level of the average in the EU
this would increase foreign direct investment
associated with international value chains in
countries of the PA in 15%.
PACIFIC ALLIANCE MAIN ACHIEVEMENTS

18. PACIFIC ALLIANCE V/S ASIA PACIFIC

19. • The Asia-Pacific region as a whole has emerged as an
important trading partner for the Pacific Alliance:
$57 billion (11%) of the Alliance’s 2015 exports
went to the Asia-Pacific region
There is room, however, for Alliance countries to
increase trade with the fast-growing ASEAN-5 countries
(Indonesia, Malaysia, Philippines, Singapore, and
Thailand)
WHY?
PACIFIC ALLIANCE V/S ASIA PACIFIC

20. Alliance exports to these countries totaled USD 2.7
billion in 2015 less than 1% of its exports to the
world
On the other hand, the ASEAN-5 countries represented
3.7% of total imports by the Pacific Alliance
They can become an increasingly important source of
intermediate goods which:
raises potential for greater participation in global
value chains
fundamental for increasing productivity and
creating better quality employment opportunities
PACIFIC ALLIANCE V/S ASIA PACIFIC

21. Considering that the PA integration will:
- Involve a single rule of origin
- Free access to a market expanded with the possibility of
using inputs from any part of the agreement to 2031
This will allow to enter the Asian market with new
products
PACIFIC ALLIANCE V/S ASIA PACIFIC

22. A springboard to Asia-Pacific
PA: Total trade with Asia China, Japan & Korea
2011 2014
(IMF 2016 data)
China:
64%
Japan:
21%
Korea:
15%
USD 176bn USD 212bn
China:
69%
Japan:
17%
Korea:
14%
PACIFIC ALLIANCE V/S ASIA PACIFIC

23. Pacific Alliance: Trade with Asia Pacific's Big Three
breakdown
* Data for 2014, latest available comparable figures according to IMF's
Department of Trade Statistics (2016). In USD bn.
China Japan South Korea
Exports Imports
Total
trade
Exports Imports
Total
trade
Exports Imports
Total
trade
Chile 18,20 14,99 33,19 7,38 2,30 9,67 4,65 2,31 6,96
Colombia 5,76 11,79 17,55 0,42 1,53 1,95 0,52 1,50 2,02
Mexico 5,96 72,88 78,85 2,65 19,30 21,95 2,03 15,16 17,19
Peru 7,03 9,79 16,82 1,58 1,22 2,80 1,21 1,52 2,73
Total 36,94 109,46 146,40 12,03 24,34 36,37 8,41 20,49 28,90
PACIFIC ALLIANCE V/S ASIA PACIFIC

24. PACIFIC ALLIANCE V/S ASIA PACIFIC
• PA Additional Protocol
• Trans Pacific Partnership (TPP)
• Regional Comprehensive Economic Partnership
(RCEP)
• Free Trade Agreement of Asia Pacific (FTAAP)

25. PACIFIC ALLIANCE BUSINESS COUNCIL

26. • Group of business men who, in a voluntary and individual
basis, agreed to become promoters of the PA
• Constituted in Mexico in 2012
• Four chapters, one for each PA country: Chile, Colombia,
México and Perú
• Each chapter is composed by prominent business men and
representatives of the business sector of each country
• It meets at least twice a year
PACIFIC ALLIANCE BUSINESS COUNCIL

27. Objectives:
• Promote the Pacific Alliance within country members
and the business community in general
• Develop recommendations and suggestions to
governments to improve the integration process
• Suggest joint actions to access foreign markets, mainly in
the Asia Pacific region.
PACIFIC ALLIANCE BUSINESS COUNCIL

28. Cosmetic new annex:
• Article 1 of the amending Protocol to the Additional
Protocol added the annex 7.11 named Elimination of
Technical Barriers to Trade in Cosmetic Products to
Chapter 7 of the Additional Protocol
• Harmonization of definition of cosmetic products based on
the definition in Regulation (EC)N|1223 / 2009 of the
European Parliament and of the Council of 30 November
2009 about cosmetic products in the European Union
PA BUSINESS COUNCIL ACHIEVEMENT

29. PACIFIC ALLIANCE
MANY CHALLENGES AHEAD

30. PACIFIC ALLIANCE
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